German insurer Allianz SE on Friday forecast the global economy would grow more slowly next year as the world faces macroeconomic challenges, saying that Taiwan and Hong Kong would be hit the hardest among major Asia-Pacific region economies by the US-China trade war.
The world economy saw robust growth this year and is on course to expand 3.2 percent from last year, but the momentum is waning and the pace of expansion will fall to 3.1 percent next year, as declines in major economies offset increases in Latin America and Africa, Allianz chief economist Michael Heise told a conference Allianz Taiwan Life Insurance Co (安聯人壽) held in Taipei.
The Munich-based group forecast that economic growth in the US would fall from 2.9 percent this year to 2.5 percent next year and that of the EU would drop from 2.1 percent to 1.8 percent, while the Asia-Pacific, the “engine of global growth,” would decline from 4.9 percent to 4.8 percent.
The US economy this year has been supported by robust domestic demand, buoyed by Washington’s expansionary fiscal policy, as well as US President Donald Trump’s tax cuts and infrastructure development plans.
“However, these policy measures will not be continued next year,” as the US’ budget deficit is to rise to US$779 billion in the 2018 fiscal year, the highest level since 2012, Heise said.
With the escalating US-China trade war, global trade growth would decelerate, but remain resilient this year, rising 3.8 percent from last year, Heise said.
However, if the US were to levy a 25 percent tariff on US$200 billion of imports from China next year, global trade growth could drop by 2 percentage points within two years, he said.
“Higher tariffs means consumption will weaken due to higher prices,” Heise said, adding that a slide in trade growth due to a full-blown trade war would threaten the global economy and nations in Asia, with Taiwan and Hong Kong facing the biggest threat at more than twice the suspected effects for China, while India and Indonesia would be the least affected.
The Taiwanese economy “was good in 2017, is still good in 2018, but will slow down in 2019,” Heise said.
With China accounting for 40 percent of its exports, Taiwan would see lower export growth next year due to the expected decline in China’s demand and shifts in regional supply chains due to the tensions, he said.
“Taiwan’s currency performed pretty well,” as the New Taiwan dollar remains stable and has fluctuated within a reasonable range against the US dollar thus far, he said.
“We do not expect a strong rise of interest rate in Taiwan,” as the central bank has shown no intention to prop up the currency by hiking its interest rates, he added.
Taiwanese economist Ma Kai (馬凱), who also attended the conference, said that if the NT dollar were to fall below NT$31.5 against the US dollar and the US Federal Reserve continues its interest-rate hikes, Taiwan’s central bank would be pressured to raise rates to curb capital outflows.
The US-China trade war is unlikely to end soon, so local businesses must prepare for the worst, Ma said.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
FACTORY SHIFT: While Taiwan produces most of the world’s AI servers, firms are under pressure to move manufacturing amid geopolitical tensions Lenovo Group Ltd (聯想) started building artificial intelligence (AI) servers in India’s south, the latest boon for the rapidly growing country’s push to become a high-tech powerhouse. The company yesterday said it has started making the large, powerful computers in Pondicherry, southeastern India, moving beyond products such as laptops and smartphones. The Chinese company would also build out its facilities in the Bangalore region, including a research lab with a focus on AI. Lenovo’s plans mark another win for Indian Prime Minister Narendra Modi, who tries to attract more technology investment into the country. While India’s tense relationship with China has suffered setbacks